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taxable benefit on the above loan

taxable benefit on the above loan

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chuck Bouchard was hired by Granite Inc. on March 15, 2018. He had lived with his parents until April 2018, at which time he purchased a new house. Under the terms of his employment contract, he received a housing loan on April 1, 2018, of $105,000 at a rate of 2%. He pays interest on the loan on a monthly basis. Assume the 2018 prescribed interest rates applicable to employee loans are as follows: • First quarter 6% • Second quarter 5% • Third quarter 5% • Fourth quarter 3% What is Chuck's taxable benefit on the above loan for 2018? a) Nil Ob) $1575.00 Oc) $1843.98 d) $2362.50 e) $3937.50
Transcribed Image Text:Chuck Bouchard was hired by Granite Inc. on March 15, 2018. He had lived with his parents until April 2018, at which time he purchased a new house. Under the terms of his employment contract, he received a housing loan on April 1, 2018, of $105,000 at a rate of 2%. He pays interest on the loan on a monthly basis. Assume the 2018 prescribed interest rates applicable to employee loans are as follows: • First quarter 6% • Second quarter 5% • Third quarter 5% • Fourth quarter 3% What is Chuck's taxable benefit on the above loan for 2018? a) Nil Ob) $1575.00 Oc) $1843.98 d) $2362.50 e) $3937.50
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